Japan's Engineer Shortage Has a Number Nobody Quotes

If you work in technology in Japan you have seen the number. By 2030 the country will be short about 450,000 IT workers, and in the pessimistic version, 790,000. It gets quoted in every recruitment pitch and every DX consulting deck in the country.

The number is real. It comes from a METI study published in April 2019, run with the Ministry of Health, Labour and Welfare and the Ministry of Education, using a survey of 3,000 IT companies and 3,000 user companies with 2,173 responses.

What almost nobody quotes is the sentence directly underneath it.

METI writes that if labour productivity in the sector rises by 3.54% a year, supply and demand for IT workers are expected to balance by 2030. Not narrow. Balance. The gap disappears.

I have never once heard that line in a meeting in Japan, and I have heard the 450,000 figure more times than I can count.

What the model actually says

It is worth laying out the arithmetic, because it is simpler than the way it gets discussed.

On the supply side, METI projected the number of IT workers in Japan rising from 1.03 million in 2018 to 1.13 million in 2030. That is growth, in a country with a shrinking working population. The pipeline is not collapsing.

On the demand side, they modelled three scenarios for how fast the IT market grows. At 4.4% a year, the high case taken from what companies themselves reported, demand reaches 1.92 million by 2030, and the shortfall against 1.13 million supply is the 790,000 figure. At 2.7%, the middle case, the gap is 450,000. At 1%, demand barely moves at all.

All of that assumes labour productivity rising 0.7% a year, which is what Japan's information and communications sector actually achieved through the 2010s. The same document notes the sector managed 2.4% a year on average since 1995.

So 3.54% is a genuinely demanding target. It is roughly five times the recent trend and about half again as fast as the long run average. I am not going to pretend it is easy.

But it is a completely different problem from the one everyone is trying to solve. Every company I talk to is treating this as a hiring race. METI's own model says the hiring race is unwinnable at the national level, because 1.13 million is 1.13 million however you distribute it, and says the productivity path closes the gap entirely.

What productivity means in software

Here is where I think the conversation goes wrong, and it is a definitional problem.

When a Japanese company hears productivity, it usually reaches for tooling. Better CI, more automation, an AI coding assistant, a low code platform for the simple internal apps. All of that is real and all of it is worth doing.

But every one of those makes building faster. None of them affects whether the thing being built should exist.

In my experience the largest single source of wasted engineering capacity is not slow engineers. It is engineers building, correctly and on time, something that turned out not to be needed. A feature that was requested by one loud stakeholder. A configuration screen for a setting nobody changes. The fourth report that duplicates three existing reports because the person who needed it did not know they existed. A migration built to preserve a workflow that only exists because of a system limitation removed years ago.

None of that shows up as a productivity problem. Everyone involved was productive. The work was well made and it was delivered. It just should not have been started.

You do not fix that with tooling. You fix it upstream, by making a decision before the sprint rather than after it, and that is design work regardless of what the person doing it is called.

Japan's actual missing role

This is not my interpretation. It is what the data says when you look at which people companies say they are missing.

IPA's DX Trends 2025 asks companies which of the five roles in the national digital skill standard they are most short of. In the United States and Germany, the answer is data scientist. In Japan, the answer is business architect, and it is not close.

The standard defines a business architect as the person who takes a digital initiative from setting the objective through to implementation and verifying the result, coordinating everyone involved along the way. In other words, the person who decides what is worth building and stays with it long enough to find out whether it worked.

Japan is not primarily short of people who can build. It is short of the people who decide what gets built. And a shortage of deciders produces exactly the pattern the rest of that report describes: effort going into efficiency rather than revenue, partial optimisation instead of whole systems, weak links between management, IT and the business units.

Two more numbers from the same report make it hard to argue this is only a labour market issue.

Asked whether the quality of their DX people is adequate, 3.8% of Japanese companies said yes. In the United States, 52.9%.

And of the more than 80% of Japanese companies reporting a shortage of DX people, 19.4% are carrying out no talent acquisition activity at all. A fifth of the companies with the problem are doing nothing about the problem. That is not a supply constraint. That is a company that has not decided what it is looking for, which is the same failure as not deciding what to build, one level up.

What I would tell a Japanese company this year

Stop treating the shortage as a reason to wait. If your plan is to execute the roadmap once you have hired, and the national projection says the people do not exist, then your plan is to not execute the roadmap.

Cut the roadmap instead, deliberately and in public. Take the list and rank it by what changes for a customer, not by what was promised to whom. The bottom half of most roadmaps I see would not be missed, and every item on it is consuming capacity from the top half right now.

Put someone in the business architect seat even if you cannot hire one. It does not have to be a new person. It has to be a named person with the authority to say no and the obligation to check afterwards whether it worked. Most companies have this person already and have never given them the second half of the job.

Use outside people for the deciding, not only the building. IPA found that American and German companies contract specialist firms and individuals far more readily than Japanese ones, which lean on internal training and moving people between departments. Internal training is good and it is slow, and 2030 is not far away.

And measure the thing you actually want to improve. Not lines of code, not story points. How long it takes from someone identifying a need to something being in front of a user, and what proportion of what you shipped last year is still being used. The second number is uncomfortable in most companies. It is also the productivity number that METI's 3.54% is really asking about.

Why I think this matters more than the headline

The 450,000 figure is used, almost always, to explain why something cannot be done. It has become the most respectable excuse in Japanese enterprise technology.

The document it comes from does not support that use. It offers two paths and the country has spent seven years discussing only one of them, which happens to be the path where the constraint is external and nobody has to change how decisions get made.

The other path requires deciding better. That is harder to buy and easier to start.

References

• Ministry of Economy, Trade and Industry, IT人材需給に関する調査（概要）, April 2019. Supply 1.03 million in 2018 rising to 1.13 million in 2030 (table 2); demand gap of 220,000 in 2018, 300,000 in 2020, 360,000 in 2025 and 450,000 in 2030 under the middle scenario (table 1); high scenario demand of 1.92 million in 2030 giving the 790,000 figure; the statement that supply and demand are expected to balance in 2030 at 3.54% annual productivity growth; sector productivity of 0.7% a year in the 2010s and 2.4% since 1995. Survey of 3,000 IT companies and 3,000 user companies in October 2018, 2,173 responses, 36.2%.
• Information technology Promotion Agency, DX動向2025 and its full report. Most lacking role by country (fig 3-4), DX talent quality adequacy at 3.8% in Japan and 52.9% in the US (fig 3-2), talent acquisition methods and the 19.4% doing none (fig 3-5).
• METI and IPA, デジタルスキル標準 (Digital Skill Standards), which defines the five DX roles including business architect and designer.